Please help me sort my personal finances

sblondon

My partner of ten years and I separated a couple of years ago, since then I've been renting a room from a family member and basically trying to pick up the pieces of my life. I've recently rented a one bed flat and for the first time am trying to take responsibility for setting up my finances properly and learn how to function (my ex partner was very controlling and wouldn't let me be involved with household finance).

This is my plan and ideas and questions, would be so grateful for input/ideas!

Current Account - living expenses - all direct debits for rent, utilities, bills etc paid from here (Currently First Direct)

Savings account - 20% of earnings paid via Direct Debit to savings account (Currently First Direct)

Considering doing the following:

Money allocated to ‘Pots’ - multiple interest paying current accounts for different things ie holidays, Christmas, car maintenance, household etc - good idea or pointless?

Cash ISA for medium/longer term personal savings (instant access or fixed)? Do you review every year and change if better interest is offered elsewhere?

Cash back credit card - buy everything on it and pay off in full every month? This also offers payment protection on purchases?

Credit cards old and paid off - keep open for good credit

Do I need to track every individual personal expense in a spreadsheet i.e 20.06.18 Petrol station £1.50 Newspaper?

Pension contribution - how much, how often?

Annually check energy tariffs, insurances etc - compare and change where necessary.

Should I have a separate account/ISA containing 3-4 months savings as a contingency/emergency fund?

ouraggie

Hi. It sounds like you have already given this plenty of thought.
In your situation I would:
keep the First Direct current acct but open another "bills" account somewhere (eg Tesco) and pay a set amount into this each month to cover the rent and utilities. All bill DDs would then come out of this. What remains in the current acct is then your disposable income as such.
I would then distribute this disposable income as follows: some (£50 a month to start with,then reduce once you have a couple of hundred in there?) into an acct only for Unforeseen Expenses such as boiler repair, car repair), some into a Big Treats fund (holidays, new car) and some into one or more Savings accounts. What's left is now only for food, petrol and spending money. Write down everything you spend for a couple of months, until you know quite precisely what your food and petrol spends are per month, if you don't already know. You don't need to put each item, just log the amount under either food, petrol or general spending. You will then know what your "general spending" budget is per week.
For the first year or so you may find it helpful to also have a Christmas account. If not, you need to decide which other account you will plunder to buy presents etc.
I would keep only the new credit card and use it mainly for general spending. Pay this bill from your current account,though, not your bills account, as this is your general spending. If you use it to buy a holiday or pay for the boiler repair you will need to "pay yourself back" into your current account from the account it should have come out of, IYSWIM.


Re pension, ISAs etc it would be helpful to know your age, what pension provision you have already, etc, if you feel you can post this info too.
Hope this helps. Best of luck!

Eco_Miser

sblondon wrote: »

This is my plan and ideas and questions, would be so grateful for input/ideas!

Current Account - living expenses - all direct debits for rent, utilities, bills etc paid from here (Currently First Direct)

Savings account - 20% of earnings paid via Direct Debit to savings account (Currently First Direct)

Sensible, but Regular Saver accounts pay better interest. First Direct's is one of the best.
See here for more.

sblondon wrote: »

Considering doing the following:

Money allocated to ‘Pots’ - multiple interest paying current accounts for different things ie holidays, Christmas, car maintenance, household etc - good idea or pointless?

'Pots' are a good idea for budgeting, but depending on how well you can resist temptation simply having the pots on a spreadsheet, and arranging your bank accounts to maximise interest can be better.

sblondon wrote: »

Cash ISA for medium/longer term personal savings (instant access or fixed)? Do you review every year and change if better interest is offered elsewhere?

Cash ISAs are now pointless for most people. The first £1000 (for base rate taxpayers) of interest is taxed at zero %, and other accounts generally pay more than ISAs.

sblondon wrote: »

Cash back credit card - buy everything on it and pay off in full every month? This also offers payment protection on purchases?

Yes - but make sure you can and do pay it off every month.

sblondon wrote: »

Credit cards old and paid off - keep open for good credit

If you're not using them, and don't expect to use them, I don't see the point in keeping them

sblondon wrote: »

Do I need to track every individual personal expense in a spreadsheet i.e 20.06.18 Petrol station £1.50 Newspaper?

It's not necessary, but very helpful to see where your money is going.

sblondon wrote: »

Pension contribution - how much, how often?

Every month, as much as gets your employer's maximum contribution if employed. Even more if you're paying higher rate tax.
£3600 gross a year if unemployed.

sblondon wrote: »

Annually check energy tariffs, insurances etc - compare and change where necessary.

Yes.

sblondon wrote: »

Should I have a separate account/ISA containing 3-4 months savings as a contingency/emergency fund?

That's another 'pot' you should have, and as above, whether you have a separate account depends on how disciplined you are at not spending allocated money. The amount is usually considered either 3-4 months earnings or 6-12 months spending.

mt99

One quick suggestion if you want to see where you're spending money is going then you could think about opening a starling bank account see the thread on this forum. it comes with a debit card and really in my opinion does help you see where all your money being spent is going

Obviously use this just for your spending money keep the First Direct or another account for direct debits etc

xylophone

You might consider opening a Santander 123 or 123 LITE.

http://www.santander.co.uk/uk/current-accounts/

sblondon

This is very helpful OurAggie thanks so much.I really like your ideas for allocation of funds and savings and the seafarer bills account is a great idea. It will be really useful to have an unforeseen circumstances pot too. I'm definitely going to follow your spending diary suggestion too.
For further info, I'm 35 and I have a pension from a previous company I worked for but am self employed now with my own company - just starting up again.
Thanks so much for your help!!

sblondon

Thanks EcoMiser! You've been so helpful. You're not the first person to tell me Isa's are a waste of time, I think I will rule that out now. Very much appreciate your feedback and suggestions, thank you!

sblondon

Thanks MT99, I can't find any info on Starling accounts, do you have a link?

sblondon

I've heard good things about Santander, will do some more research, thanks so much!

Don80

Hi

Just adding my thoughts... sorry to hear about the break up, I know how hard that can be. It sounds like you have it covered though and could organise my finances! :rotfl:

sblondon wrote: »

Current Account - living expenses - all direct debits for rent, utilities, bills etc paid from here (Currently First Direct)

Savings account - 20% of earnings paid via Direct Debit to savings account (Currently First Direct)

This is a great idea. I have two accounts, my main one with Bank of Scotland as it has interest and cashback features. I also have one with Halifax as it pays £3 a month which is more than interest I earned previously. I pay out everything the day I get paid. The irony is that Halifax is just a Bank of Scotland trading name!

sblondon wrote: »

Money allocated to ‘Pots’ - multiple interest paying current accounts for different things ie holidays, Christmas, car maintenance, household etc - good idea or pointless?

Cash ISA for medium/longer term personal savings (instant access or fixed)? Do you review every year and change if better interest is offered elsewhere?

Watch the multiple current accounts, you need to make sure that you can meet the rules each month in terms of pay-in and direct debits (varies between banks). This could become quite a juggling act! I wouldn't look too hard at ISAs, they're worthless for most people as you can hold money tax free, so look at monthly/regular saver accounts first. Many are one year products so you would need to review annually anyway.

sblondon wrote: »

Cash back credit card - buy everything on it and pay off in full every month? This also offers payment protection on purchases?

Credit cards old and paid off - keep open for good credit

Yes, but keep one or two, too much available credit is not a good idea. See point 22 at
http://www.moneysavingexpert.com/loans/credit-rating-credit-score#boost

Maybe you could switch to a new provider to maximise what you get?

sblondon wrote: »

Do I need to track every individual personal expense in a spreadsheet i.e 20.06.18 Petrol station £1.50 Newspaper?

I wouldn't track every small expense, too much work! My salary goes into my Bank of Scotland account, I then transfer all my bills money out. I have two small direct debits so I get the interest, other than that, what's in the account is what I have left there and budgeted to spend.

sblondon wrote: »

Annually check energy tariffs, insurances etc - compare and change where necessary.

Yes, I always do this, and almost always save money. My gas and electric bills are now £40 a month switching to Eon, down from £65 with NPower. This was the first year my car insurance renewal quote from esure was actually cheaper than anything I found on comparison sites!

sblondon wrote: »

Should I have a separate account/ISA containing 3-4 months savings as a contingency/emergency fund?

In an ideal world, yes.

sblondon

Thanks so much Don80, your response is so helpful and thoughtful. Great point re current accounts paying and DD's, I hadn't thought of that! Great to hear your switching providers has saved money too : )